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California Local Nuisance Cases Against Oil and Gas Producers Remanded to State Court

Multiple suits alleging state common law claims against major oil and gas producers have been filed in state court in California in recent months. The Counties of San Mateo and Marin and the City of Imperial Beach filed broader public nuisance claims, while more tailored claims were filed by the Cities of Oakland and San Francisco. Both sets of cases were removed to federal court, but differing decisions at the District Court level have sent the cases on divergent paths. On March 16, 2018, the consolidated San Mateo, Marin, and Imperial Beach cases were remanded to state court, while the Oakland and San Francisco cases remain in federal court pursuant to a February 27, 2018 order denying remand. [County of San Mateo v. Chevron Corp., et al., Case No. 17-cv-04929-VC (Dkt. 144); City of Imperial Beach v. Chevron Corp., et al., Case No. 17-cv-04934-VC (Dkt. 140); and County of Marin v. Chevron Corp., et al., Case No. 17-cv-04935-VC (Dkt. 140). The order was issued on March 16, 2018.]

 

Background

Following a successful judgment in People of the State of California v. ConAgra, et al. against three manufacturers of lead-based paint on state common law theories, advocates for municipalities seeking to recover climate change-related damages have advanced a number of cases against oil and gas companies alleging state common law claims. In November 2017, the Sixth District Court of Appeal upheld the superior court’s judgment in the ConAgra case, a ruling that has been viewed by some as a potential bolster to the climate change suits, five of which were filed before the appellate court’s decision.

The first of the California suits were filed on July 17, 2017 by Imperial Beach and the Counties of San Mateo and Marin. All three were filed in California superior court and alleged that 29 fossil fuel-producing defendants’ “production, promotion, marketing, and use of fossil fuel products, simultaneous concealment of the known hazards of these products, and their championing of anti-regulation and anti-science campaigns, actually and proximately caused” injury to the plaintiff municipalities, including flooding and sea level rise harming beaches, communities, and infrastructure.

Unlike the ConAgra litigation, the San Mateo, Marin, and Imperial Beach suits were not limited to public nuisance claims and instead alleged a number of state common law causes of action: public nuisance, private nuisance, negligence, trespass, strict liability for failure to warn, negligent failure to warn, and strict liability for design defect. The suits also differed from the ConAgra strategy in terms of requested relief; while the ConAgraremedy was limited to financing of an abatement fund so that municipalities could address lead paint, the San Mateo, Marin, and Imperial Beach suits sought multiple remedies, including compensatory damages, punitive damages, disgorgement of profits, and abatement of the alleged nuisance. All three actions were removed to U.S. District Court on August 24, 2017 and consolidated before Judge Chhabria of the U.S. District Court for the Northern District of California.

On a parallel path, the cities of Oakland and San Francisco brought suit in state court against five oil companies on September 19, 2017. The Oakland and San Francisco suits were crafted bearing in mind the ConAgra strategy, with a pared down complaint alleging only a public nuisance cause of action and requesting as a remedy only money damages to contribute to a fund for the cities to adapt to the impacts of sea level rise. The two cases were also removed and related in federal court, and a motion to remand those suits to state court was denied by Judge Alsup of the Northern District of California on February 27, 2018.

 

The Court’s Decision

In removing the cases to federal court, the defendants argued that the cases implicate “uniquely federal interests” and that the causes of action are “governed by federal common law, not state law.” San Mateo, Marin, and Imperial Beach moved to remand the cases to state court, arguing that no federal claims or questions of federal law are at issue.

Ultimately, the court agreed with the three municipalities, rejecting the suggestion that their state common law claims were superseded by federal common law. Instead, the court cited to American Electric Power Co., Inc. v. Connecticut, a United States Supreme Court decision,and Native Village of Kivalina v. ExxonMobil Corp., a Ninth Circuit decision, both of which determined that federal common law claims are displaced by the federal Clean Air Act, to find that state common law claims could not be precluded by federal common law in this context. Specifically acknowledging—and rejecting—Judge Alsup’s ruling in the San Francisco and Oakland suits, the court found that the San Mateo, Marin, and Imperial Beach suits were not so materially different from Kivalinathat federal common law could play a role. The court accordingly concluded that “these cases should not have been removed to federal court on the basis of federal common law that no longer exists.”

The court then tackled the defendants’ arguments that the municipalities’ state law claims were completely preempted by federal law, that Grablejurisdiction warranted removal, and that the cases were removable under statutory removal provisions. First, the court noted that the defendants could not point to any statutory provision that completely preempted the state law claims, pointing out that both the federal Clean Air Act and Clean Water Act contain express savings clauses preserving state causes of action. Moving on toGrable jurisdiction, the court found that the defendants had not met the bar of demonstrating that there was “a specific issue of federal law that must necessarily be resolved to adjudicate the state law claims.” Finally, the court rejected each of the defendants’ suggestions of specific statutory removal provisions under the Outer Continental Shelf Lands Act, federal enclave jurisdiction, federal officer removal, and bankruptcy removal, saying none of those discrete removal provisions were applicable in this context.

In granting the plaintiffs’ motion to remand, the court acknowledged that the suits “raise national and perhaps global questions,” but concluded that the question of whether the actions were federally preempted was best addressed in state court, where the suits were filed.

 

Conclusion and Implications

Judge Chhabria’s decision sets the San Mateo, Marin, and Imperial Beach suits on a different course from their San Francisco and Oakland counterparts. Following the court’s March 16, 2018, on April 9, 2018, the court granted the defendants’ motion to stay the remand orders pending an interlocutory appeal of the remand order. The court’s decision to remand will now be appealed to the Ninth Circuit. If the plaintiff municipalities do find themselves back in state court, it will remain to be seen whether state common law causes of action will ultimately prove as successful in the climate change context as they did in the lead paint context.

(Julia Stein)